Posts Tagged ‘Global Economy’

Cotton ‘Too Cheap’ to Draw Significant New Acreage

(Bloomberg) — The global cotton market will remain tight through the next crop season as futures prices are too low to induce farmers to significantly boost the area that they devote to the fiber, Olam International Ltd.

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Commodities : Sugar

With the global economy showing signs of stabilization and recovery, demand for sugar is accelerating in developing countries, and ICE’s Sugar No. 11 markets are increasing in depth and liquidity. In the month of January 2010, more than $75 billion in notional value of Sugar No.

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Japan launches $81bn economic stimulus package

The Japanese government has announced it is pumping $81 billion (7.2 trillion yen) to help boost the country’s flagging economic recovery.

Despite the Japanese economy reporting growth in the last two quarters, analysts believe it may be vulnerable to another downturn if the yen remains strong, making the country’s exports less competitive in foreign markets.

The stimulus package has been agreed upon by Japan’s coalition government, which is made up of three different parties.

But with the country’s public debt approaching 200 per cent of its gross domestic product, economists believe the money will not provide long-term security for the Japanese economy.

Yasunari Ueno, chief market economist at Mizuho Securities, said: “This may help the economy somewhat.

“But it doesn’t even begin to address the more fundamental issues facing Japan, such as weaknesses in the global economy and deflation.”

Last month, Japan’s cabinet office warned that the country had returned to deflation for the first time since 2006.

Geithner, Brown Split on Tobin Tax at G-20 Meeting

(Bloomberg) — Group of 20 governments split on whether to tax financial trading as part of a broader strategy to ensure the global economy’s expansion is less crisis-prone.

U.K. Prime Minister Gordon Brown told a meeting of finance chiefs in St. Andrews, Scotland yesterday that such a levy could prevent excessive risk taking and fund future bank rescues, adding momentum to a debate begun by France.

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OPEC leaves output unchanged

OPEC agreed to keep its production levels unchanged on Thursday, betting that higher oil demand as the global economy recovers would push prices towards the cartel’s target of $75-$80 a barrel by the end of the year.

Opec, which produces about 40 per cent of the world’s oil, has announced three output cuts since September, totalling 4.2m b/d – about 5 per cent of global oil demand – in an effort to shore up oil prices.

While gold consolidated around the $950 an ounce level, caution dominated sentiment in commodity markets amid concerns about the outlook for the dollar and pressures in the Treasury bond market due to soaring levels of government debt.

Nymex July West Texas Intermediate traded just 2 cents higher at $63.47 a barrel afar reaching $63.82 during the previous session, a fresh seven-month high. ICE July Brent dipped 6 cents at $62.44 a barrel.

Gold traded at $9487.70 a troy ounce, moving between a low of $943.55 and a high of $951.55 after ending trading in New York in the previous session at $948.

Investor inflows into gold exchange traded funds have stalled with holdings in the SPDR Gold Trust, the largest physically backed fund unchanged at 1,118.76 tonnes since May 22.

John Reade, precious metals analyst at UBS said investors in the gold market were concerned about increasing levels of government debt, the threat of currency debasement and rising inflationary pressures.

“We suspect that the recent moves in US fixed income markets (the benchmark US 10-year Treasury yield rose 19 basis points to 3.74 per cent on Wednesday) have strengthened the case for owning gold and that any sign of a push higher in TIPS spreads towards and beyond the 2.71 per cent high seen over the past five years could trigger considerably more interest in gold as a hedge against inflation,” said Mr Reade.

Economists predict W-shaped recovery

Many economists think the economic recovery will be “W shaped,” meaning the economy might go up and down before resuming a course of growth. Most recoveries since the 1940s have been V shaped. This time, the Federal Reserve and other central banks have been injecting trillions of dollars into the global economy, meaning a sharp rise in inflation could fuel a bouncy ride ahead, observers said.


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China’s GDP to overtake U.S. by early 2020s, says Deutsche Bank

China will overtake the U.S. in terms of economic output within a decade, according to estimates released Thursday by Deutsche Bank, which said it had to accelerate its forecast of the mainland’s leadership in the global economy in view of favorable growth dynamics in emerging markets.

China’s growth will be underpinned by a rapid expansion in emerging market economies, which will account for about 70% of global GDP growth in the coming decade, Deutsche Bank’s Chief Economist for Greater China, Jun Ma, told an investment conference in Hong Kong.
China will “massively invest” in these emerging economies using its nearly $2 trillion in foreign exchange reserves, extend its leverage by extending loans to the International Monetary Fund, and allow the yuan to appreciate in preparation for the currency’s potential reserve status. 

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IMF predicts troubled assets could spiral to $4 trillion

The International Monetary Fund is forecasting that financial institutions have racked up $4 trillion in troubled debt. In its upcoming assessment of the global economy, the IMF is expected to raise its estimate of the deterioration of assets originated in the U.S.

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